SAO PAULO, Nov 11 (Reuters) – Brazil’s central bank governor Gabriel Galipolo said on Wednesday that he sees the value of providing monetary policy guidance as negative amid an uncertain economic environment and market demand for an indication of future course of action.
The central bank has only indicated that a more challenging environment calls for caution and interest rates at a restrictive level, Galipolo added at a Bradesco Asset Management event in Sao Paulo.
• “What is expected of a central bank is that it be frank and transparent in how it sees the economy,” Galipolo said
• The governor described the current external environment as “adverse,” which requires extra caution in emerging markets such as Brazil
• Last week, the bank paused an easing cycle it had launched in March, holding the benchmark Selic rate at 13.75% as it grappled with a worsening inflation outlook
• Galipolo said that signals regarding monetary policy transmission into the economy are gaining strength, despite a still resilient labor market
• The central bank will never abandon its primary mandate of meeting the inflation target, he said, adding that the current inflation-targeting system should be preserved
(Reporting by Fernando Cardoso, Editing by Natalia Siniawski)